Starting up & Development

Private limited liability company (SARL)

Large businesses

Practical information

SMEs

Last update 22.07.2019

A private limited liability company (Société à responsabilité limitée – SARL) is a special form of commercial company in that: it combines features that are characteristic of both capital companies (e.g. the limitation of shareholders' liability to the extent of their contribution) and partnerships (e.g. the non-transferability of shares in the company).

The SARL is the most common form of incorporation in Luxembourg. Approximately two-thirds of companies in Luxembourg are SARLs.

An SARL can have between 2 and 100 shareholders.

There is also a form of SARL known as a "single member" SARL. The single member SARL is an exception to the traditional idea of a company in company law, in that it is an SARL that can be set up by a single shareholder.

Who is concerned

An SARL can have between 2 and 100 shareholders. The shareholders may be natural or legal persons.

There may be only one shareholder at the time of incorporation since it is possible for one shareholder to own all of the shares.

Prerequisites

An SARL may be formed for any business purpose.

However, insurance companies, savings companies and investment companies may not be formed as SARLs.

Capital

Incorporating as an SARL requires a minimum share capital of EUR 12,000.

The share capital must be fully subscribed and paid up at the time of incorporation.

An SARL may issue shares with different values, either with or without a nominal value.

Contributions can be made in cash or in kind.

Contributions in kind must be valued in the articles of association.

Contributions "in industry" (services, know-how, etc.) do not form part of the share capital and do not need to be valued separately by a statutory auditor. Contributions in industry:

entitle the contributor to non-transferable shares;

entitle the contributor to share in the profits and net assets of the company, and obligates them to contribute to covering its losses.

Form of company shares

The shares in the capital of an SARL are issued as registered shares, with or without a nominal value.

An SARL is permitted to issue profit shares. The profit shares do not form part of the company's share capital. The rights attaching to the profit shares must be specified in the articles of association.

Public issues of shares or bonds are not permitted.

Private bond issues are allowed, but require the shareholders' approval in the case of convertible bonds.

Transfer of company shares

The company shares are not freely negotiable.

They may only be transferred inter vivos to non-shareholders with the approval of the general shareholders meeting representing at least 75 % of the share capital. However, if provided for in the articles of association, the proportion of the share capital required for approval may be lower (but not less than 50 %).

Unless otherwise specified in the articles of association, the shares may be freely transferred between the shareholders.

Share transfers must be recorded in a notarised deed or a private deed.

Structure of managerial bodies

An SARL is managed by one or more managers – who may or may not be shareholders – appointed by the shareholders, either in the articles of association or by subsequent deed, for a limited or unlimited term.

The manager

With the exception of actions requiring a decision on the part of the shareholders, as provided for by law or in the articles of association, the manager(s) may undertake any action they deem necessary or useful for achieving the corporate purpose.

They represent the company with respect to third parties and in the courts.

There are no restrictions on the nationality of an SARL's managers; they may be Luxembourg nationals, EU nationals, or nationals of any third country.

Managers need not be registered as traders.

They may only be removed from office for legitimate reasons, such as: obvious incapacity, unfair competition to the detriment of the company or misappropriation of funds, unless otherwise specified in the articles of association.

Meeting of shareholders

The shareholders' decisions are taken at general meetings of shareholders.

The general meeting decides on:

amendments to the articles of association;

changes in the company name;

changes in the share capital;

changes in the legal form of the company;

the appointment or dismissal of managers;

the liquidation of the company, or changes in its nationality.

The shareholders are entitled to a share of the profits.

The shareholders are entitled to information on the inventory, balance sheets and reports produced by the supervisory board, if such a board exists.

In SARLs with more than60 shareholders a general meeting of shareholders must be held at least once a year. The time of year at which the meeting is held is specified in the company's articles of association.

Other meetings of shareholders are convened by the manager(s).

Unless the articles of association have been amended to state otherwise, it is not mandatory to hold a general meeting in SARLs with fewer than 60 partners. In this case, the partners are invited to send in their votes in writing, after having received the text of the resolutions or decisions to be taken.

All shareholders are entitled to take part in the decision-making process.

Shareholders may enter into agreements among themselves regarding the exercise of voting rights.

Each shareholder has a number of votes equal to the number of shares they hold. Decisions are validly taken by majority vote representing 50 % of the capital.

In SARLs with a single shareholder, the latter alone wields the powers vested in the general meeting of shareholders.

Liability

The founders of the company and, in the event of an increase in capital, the managers, are jointly liable in respect of third parties for:

any part of the capital that is not validly subscribed, and for the difference between the minimum capital and the subscribed capital;

the full payment of the shares and the portion of the capital for which they have subscribed;

remedying any damages arising from:

the company's nullity; or

omissions or inaccurate statements in the company's deed of incorporation.

However, the deed of incorporation of the SARL may restrict the label of "founder" to subscribers who, together, hold at least one third of the share capital. In that case, all other shareholders mentioned in the deed of incorporation will be deemed simple subscribers.

The shareholders are liable to the extent of the amount of their contribution to the share capital.

The company is bound by the actions undertaken by the manager(s), even when they surpass the corporate purpose, unless it can be proven that the third party involved knew, or could not have been unaware of, the fact that the action surpassed the corporate purpose.

However, when several managers are appointed, the company may define their joint and/or individual duties and powers, in which case the latter must be declared to the Electronic Compendium of Companies and Associations (Recueil électronique des sociétés et associations – RESA) for publication and then become enforceable against third parties.

Managers are accountable to the company for carrying out the duties entrusted to them, and for any misdeeds committed in the performance of such duties.

Obligations

Auditor oversight

SARLs with more than 60 shareholders are subject to compulsory oversight by one or more internal auditors, whose names are mentioned in the articles of association. The auditors may or may not be shareholders.

Legal publications

In order to register the company with the RCS, the following information about the company must be disclosed:

the company or trade name and, where applicable, any abbreviations or commercial sign used;

the legal form of the company and, where applicable, any additional details required by law;

the exact address of the company's head office;

the purpose of the company;

the total share capital;

the identities of its shareholders, their private or professional addresses and the number of shares they hold;

for shareholders who are natural persons, their surnames, first names and their date and place of birth;

for shareholders who are legal persons that are not registered with the Luxembourg Trade and Companies Register:

their company or trade name;

their legal form;

their business registration number in the Trade and Companies Register, if the law of the State in which the company is based provides for such a number, and the name of the business register;

for shareholders who are legal persons registered with the Luxembourg Trade and Companies Register: merely the registration number.

The deed of incorporation and all subsequent amendments thereto must be filed with the RCS for publication.

All of the company's legal documents must bear:

the company name;

the wording, "société à responsabilité limitée";

the address of its head office;

the Luxembourg Trade and Companies Register registration number;

the capacity of the signatory of the legal document.

There is no requirement to mention the share capital.

The company's financial statements must be filed with the Luxembourg Trade and Companies Register within 7 months of the close of the financial year (6 months to hold the general meeting of shareholders, plus 1 month from the date of the meeting).

Forms / Online services

To complete your application, the information about you collected from this form needs to be processed by the public administration concerned.

That information is kept by the administration in question for as long as it is required to achieve the purpose of the processing operation(s).

Your data will be shared with other public administrations that are necessary for the processing of your application. For details on which departments will have access to the data on this form, please contact the public administration you are filing your application with.

Under the terms of Regulation (EU) 2016/679 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, you have the right to access, rectify or, where applicable, remove any information relating to you. You are also entitled to withdraw your consent at any time.

Additionally, unless the processing of your personal data is compulsory, you may, with legitimate reasons, oppose the processing of such data.

If you wish to exercise these rights and/or obtain a record of the information held about you, please contact the administration in question using the contact details provided on the form. You are also entitled to file a claim with the National Commission for Data Protection (Commission nationale pour la protection des données), headquartered at 1, Avenue du Rock'n'Roll, L-4361 Esch-sur-Alzette.

By submitting your application, you agree that your personal data may be processed as part of the application process.

Model of a memorandum of association for a Luxembourg SARL unipersonnelle

To complete your application, the information about you collected from this form needs to be processed by the public administration concerned.

That information is kept by the administration in question for as long as it is required to achieve the purpose of the processing operation(s).

Your data will be shared with other public administrations that are necessary for the processing of your application. For details on which departments will have access to the data on this form, please contact the public administration you are filing your application with.

Under the terms of Regulation (EU) 2016/679 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, you have the right to access, rectify or, where applicable, remove any information relating to you. You are also entitled to withdraw your consent at any time.

Additionally, unless the processing of your personal data is compulsory, you may, with legitimate reasons, oppose the processing of such data.

If you wish to exercise these rights and/or obtain a record of the information held about you, please contact the administration in question using the contact details provided on the form. You are also entitled to file a claim with the National Commission for Data Protection (Commission nationale pour la protection des données), headquartered at 1, Avenue du Rock'n'Roll, L-4361 Esch-sur-Alzette.

By submitting your application, you agree that your personal data may be processed as part of the application process.